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Indian Express Explained 18-19/06/2020

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1) Explained: Why banning trade with China will hurt India more:-

There are several reasons.

1. Trade deficits are not necessarily bad

One of the main reasons why banning trade has been the first reaction is the notion that having a trade deficit is somehow a “bad” thing. The fact is altogether different. Trade deficits/surpluses are just accounting exercises and having a trade deficit against a country doesn’t make the domestic economy weaker or worse off.

Example :- INDIA has a trade deficit with the other 22 of them (including China) — regardless of their size and geographic location. This list includes France, Germany, Nigeria, South Africa, UAE, Qatar, Russia, South Korea, Japan, Vietnam, Indonesia among others.

Yet, a trade deficit doesn’t necessarily mean that the Indian economy is worse off than South Africa’s. 

2. Will hurt the Indian poor the most

More often than not, the poorest consumers are the worst-hit in a trade ban of this kind because they are the most price-sensitive. For instance, if Chinese ACs were replaced by either costlier Japanese ACs or less efficient Indian ones, richer Indians may still survive this ban — by buying the costlier option — but a number of poor, who could have otherwise afforded an AC, would either have to forgo buying one because it is now too costly (say a Japanese or European firm) or suffer (as a consumer) by buying a less efficient Indian one.

Similarly, the Chinese products that are in India are already paid for. By banning their sale or avoiding them, Indians will be hurting fellow Indian retailers. Again, this hit would be proportionately more on the poorest retailers because of their relative inability to cope with the unexpected losses.


3. Will punish Indian producers and exporters

Some may argue that trading with China hurts many Indian producers. This is true, but it is also true that trading hurts only the less efficient Indian producers while helping the more efficient Indian producers and businesses.

It is important to note that the list of Indian consumers of Chinese imports does not comprise just those who consume the final finished good from China; several businesses in India import intermediate goods and raw materials, which, in turn, are used to create final goods — both for the domestic Indian market as well as the global market (as Indian exports).

4. Will barely hurt China

Still, some may argue that we want to single out China because it has killed our soldiers at the border and we will now punish it through trade.

Then the question is: Will banning trade hurt China?

The truth is the exact opposite. It will hurt India and Indian far more than it will hurt China.

Let’s look at the facts again. While China accounts for 5% of India’s exports and 14% of India’s imports — in US$ value terms — India’s imports from China (that is, China’s exports) are just 3% of China’s total exports. More importantly, China’s imports from India are less than 1% of its total imports.

The point is that if India and China stop trading then — on the face of it — China would lose only 3% of its exports and less than 1% of its imports, while India will lose 5% of its exports and 14% of its imports.

Here’s some food for thought: /What if Xi Jinping and the political establishment in China do the same thing to India? What if they decided to abruptly ban all trade and forbid all private investment via any route into India?/

Of course, India would survive, but at a huge cost to common Indians while depriving many Indian businesses (the start-ups with billion-dollar valuations) of Chinese funding.

Why? Because in the short to medium term, it would be both difficult and costly to replace Chinese products. Imagine diverting all our imports from China to Japan and Germany. We will only increase our total trade deficit.

If on the other hand, we decide to use Indian products, that too would cost us more — albeit just internally.

5. India will lose policy credibility

It has also been suggested that India should renege on existing contracts with China. Again, while in the short-term this may assuage hurt sentiments, it would be hugely detrimental for a country such as India which has been trying to attract foreign investment.

One of the first things an investor — especially foreign — tracks is the policy credibility and certainty. If policies can be changed overnight, if taxes can be slapped with retrospective effect, or if the government itself reneges on contracts, no investor will invest. Or, if they do, they will demand higher returns for the increased risk.

6. Raising tariffs is mutually assured destruction

It has also been argued that India should just slap higher import duties on Chinese goods. Others have suggested that India can allow primary and intermediate goods from China at zero duty, but apply prohibitive tariffs on final goods.

Even leaving aside the rules of the World Trade Organization that India would be violating, this is a poor strategy since others — not just China — can and most likely will reciprocate in the same way.

What will also go against India here is its relatively insignificant presence in global trade and value chains. In other words, it is relatively easy for the world to bypass India and carry on trading if India doesn’t play by the rules.

The Upshot:

The first thing to understand is that turning a border dispute into a trade war is unlikely to solve the border dispute. Worse, given India and China’s position in both global trade as well as relative to each other, this trade war will hurt India far more than China. Thirdly, such a shock — banning all trade with China — will be most poorly timed since the Indian economy is already at its weakest point ever — facing a sharp GDP contraction.

2)What are non-permanent seats in the UN Security Council, how are they filled?:-

The UNSC is composed of 15 members: five permanent members — China, France, Russian Federation, the United States, and the United Kingdom — and 10 non-permanent members who are elected by the General Assembly. The non-permanent members are elected for two-year terms — so every year, the General Assembly elects five non-permanent members out of the total 10.

These 10 seats are distributed among the regions of the world: five seats for African and Asian countries; one for Eastern European countries; two for Latin American and Caribbean countries; and two for Western European and Other Countries.

Of the five seats for Africa and Asia, three are for Africa and two for Asia. Also, there is an informal understanding between the two groups to reserve one seat for an Arab country. The Africa and Asia Pacific group takes turns every two years to put up an Arab candidate.

Elections for terms beginning in even-numbered years select two African members, and one each within Eastern Europe, the Asia Pacific, and Latin America and the Caribbean. Terms beginning in odd-numbered years consist of two Western European and Other members, and one each from Asia Pacific, Africa, and Latin America and the Caribbean.

Has India been in the UNSC earlier?

India has earlier been a non-permanent member of the Security Council in 1950-51, 1967-68, 1972-73, 1977-78, 1984-85, 1991-92 and 2011-12. For the 2011-12 term, India won 187 of 190 votes after Kazakhstan stood down from its candidacy.

3) Explained: Why India is trying to boost its oil refining capacity:- India is set to double its refining capacity for crude oil to 450-500 million tonnes per annum by 2030.

Projects :-

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Explained: Why India is trying to boost its oil refining capacity

India is set to double its refining capacity for crude oil to 450-500 million tonnes per annum by 2030. Why this boost? How will it be achieved?

  • Written By Karunjit Singh , Edited By Explained Desk | New Delhi |
  • Updated: June 18, 2020 1:07:52 pm

NEXTMaharashtra oil refinery, India oil production, India oil refinery capacityPetroleum and Natural Gas Dharmendra Pradhan said the expansion in refining capacity will come from both brownfield and greenfield projects. (Express Photo/File)

India is set to double its refining capacity for crude oil to 450-500 million tonnes per annum by 2030 said Union Minister for Petroleum and Natural Gas Dharmendra Pradhan on Tuesday. The minister said the construction of a new refinery in Ratnagiri, Maharashtra with a refining capacity of 60 million tonnes per annum is set to start soon.

Why is this boost in capacity needed?

India’s current refining capacity of 249.9 million tonnes per annum exceeds domestic consumption of petroleum products which was 213.7 million tonnes in the previous fiscal. However, India’s consumption of petroleum products is likely to rise to 335 million tonnes per annum by 2030 and to 472 million tonnes by 2040 according to government estimates. India needs to boost refining capacity to meet growing demand.

How will this be achieved?

Pradhan said the expansion in refining capacity will come from both brownfield and greenfield projects. The new refinery project in Ratnagiri is one of the key projects in the planned expansion and has received investment from Saudi Arabia and the UAE’s national oil companies — Saudi Aramco and ADNOC respectively — which together own 50 per cent of the project while the remaining 50 per cent is owned by Indian PSUs, Indian Oil Corporation Ltd., Bharat Petroleum Corporation Ltd. and Hindustan Petroleum Corporation Ltd. Other key projects include a joint venture between HPCL and the Rajasthan government for a new refinery in Barmer Rajasthan with a refining capacity of 9 million tonnes per annum as well as the major expansion projects in existing refineries in Panipat, Paradip and Koyali.

4)Coal Sector in India Complete A-Z

India being a developing country, coal remains one of the most important indigenous energy resources and the dominant fuel for power generation and many industrial applications.

Presently, despite being the world’s fourth-largest producer, India is the second-largest importer of the dry-fuel. Therefore, in line with the vision to build an ‘Atma Nirbhar Bharat’, a slew of reforms to promote commercial mining of coal in India, has been announced.

Unlocking coal mining for private players is a step forward to attain self-reliance in the coal sector. However, for sustainable utilization of coal, there is a need to look into these reforms from a multidimensional viewpoint.

Announced Reforms In Coal Sector

  • Commercial mining of coal allowed, with 50 blocks to be offered to the private sector.
  • Entry norms will be liberalised as it has done away with the regulation requiring power plants to use “washed” coal.
  • Coal blocks to be offered to private companies on revenue sharing basis in place of fixed cost.
  • Coal gasification/liquefaction to be incentivised through rebate in revenue share.
  • Coal bed methane (CBM) extraction rights to be auctioned from Coal India’s coal mines.

Intended Benefits

Plugging Supply Gap: The nationalisation of coal in 1973 meant that domestic coal could be mined only by public sector companies.

  • In this pursuit, Coal India Limited (CIL), registered an unprecedented increase in coal production and became the world’s largest coal miner.
  • However, the country’s coal demand continued to grow at a much faster rate. Due to this, the growth in coal import (2009 to 2014) stood at 23 per cent.
  • Commercial mining of coal can increase the domestic production of coal and bridge the supply gap.

Boost Economy and Employment: Allowing commercial mining may help to address India’s coal production needs, provide investment opportunities and save precious foreign exchange.

  • This will play a major role in ensuring the energy security of the country, as nearly the majority of power generation in India comes from thermal power plants.
  • The domino effect on sectors that use coal, like steel, power and aluminium, is going to be significant.

Win-Win Situation: The government has introduced a more equitable system of sharing of revenues, moving away from fixed rates to a revenue-sharing model.

  • Revenue sharing model will ensure when the prices go up, the miner shares more with the government; and if the price decreases, miner shares less. This is a win-win situation for both parties.

Associated Challenges

Dominance of Coal India: While reforms are aimed at ending the monopoly of Coal India Ltd., that’s unlikely to happen in the near future.

  • The current commercial coal mining regime will find it difficult to compete with Coal India. As the major consumer of coal in India (thermal power plants and steel sector) are in long term purchase agreements with Coal India.
  • Also, it will be a challenge for many companies to be able to match Coal India’s ability to navigate the complicated bureaucratic and political hurdles associated with opening new coal mines.

Issue with Non-washing of Coal: Doing away with the regulation requiring power plants to use “washed” coal will have huge environmental and economic costs.

  • The “washing” requirement was introduced in 1997 and promised the use of cleaner coal in power production. It was India’s only legitimate justification to extend the use of coal as a development fuel despite the climate crisis.
  • Also, a manufacturing or power-producing unit has to burn more coal and in turn generate not only ash but also noxious gases, particulate matter and carbon emissions.

Note:

  • Coal washeries are units that reduce the ash content in coal through a mix of segregation, blending and washing techniques.
  • These technologies are meant to allow the conservation and optimal use of coal reserves by improving the quality and efficiency of low grade, high ash Indian coal.
  • Washed coal also provides high grade “coking” coal that is essential for the steel sector.
  • Indian coal is known to contain 30-50% ash, meaning that for every two units of coal burned, one unit of ash could be produced.

External Challenges: In the era of intense competition from renewables, the rising NPAs of thermal power plants (TPPs) and a massive global withdrawal from fossil fuel for climate and environmental reasons poses a challenge of viability for commercialising coal.

Way Forward

  • For easing commercialisation of coal, there is a need to establish a single-window clearance process for coal mines.
    • Offering projects with secured clearances will boost timely development as well as increase industry participation
  • Government support for the early resolution in land acquisition-related issues is needed to ensure timely operationalisation of coal mines.
    • Further, commercial mining projects can be aided with investment in initial infrastructure settings which is more capital intensive than mining.
  • Technology upgradation measures to be imposed to improve the productivity of the coal mines and improve recovery from the coal mines.
  • The government may consider creating funds to support overseas acquisition to supplement domestic resources.
  • Steps need to be taken to promote research and exploration activities and modern underground mass production technologies.

5) Social Media And Democracy

The introduction of the printing press in 15th century Europe revolutionised the social landscape, helping information spread further and faster than ever before. This had a deep link with the spread idea of democracy all over the world. In the present era, social media represents a similar paradigm shift.

Today, social media plays a crucial role in facilitating and distributing content related to all the matters that have a larger influence on public opinion and subsequently on democracy.

Although social media helps in the deepening of democracy, it also tends to weaken the concept of democracy and the emergence of anarchy, because of its unregulated nature and its role in the spread of fake news.

Social Media and Deepening of Democracy

  • Aiding C-Governance: Social media has led to the emergence of citizen-led governance (C–governance) in India.
    • Social media platforms help to create awareness from one another to a million and be united for any social cause. In the process, the existence of social media can nudge citizens to seek solutions.
    • Also for C-governance, people need to have information and be able to convey it to others. Social media platforms make that ton easier.
    • Given this, social media is gradually being accepted as the fifth estate of democracy.
  • Democratization of Expression: Social media has made Indian politics more inclusive by allowing citizens, who were traditionally excluded from politics due to geography and demography, to gain direct entry into the political process.
    • It has also allowed for a diversity of viewpoints and public engagement on an unprecedented scale.
  • Instrument for Bringing Behavioural Change: Use of social media for policy crowdsourcing and publicity is evident in the success of pan-India campaigns such as Swacch Bharat Abhiyan and the recently-launched Fit India Movement.
  • Making political communication people-centric: Social media has been increasingly used by Indian political actors for routine political communication between elections to provide unmediated and direct communication to connect citizenry.
    • Also, social media has changed the power of political messaging and has moved away from the mass media model and places it firmly into peer-to-peer, public discourse.

Ill-effects of Social Media On Democracy

  • Widening Social Fault Lines: Social media has enabled a style of populist politics, which on the negative side allows hate speech and extreme speech to thrive in digital spaces that are unregulated, particularly in regional languages.
  • Formation of Information Cocoons: Social Media, due to its technological capacity has enabled self-sorting and personalization of information one perceives.
    • This leads to the phenomenon of group polarization — which takes hold when like-minded people talk to one another and end up thinking a more extreme version of what they thought before they started to talk.
    • This is not in sync with the ethos of democracy which is based on debate, dissent and discussion.
  • Menace of Fake News: The rise of polarizing and divisive content has been a defining moment of modern politics, which is fed by fake news propagation through social media channels.
    • Further, dissemination of fake news through social media, among populations with low-to-no levels of critical digital literacy is a big challenge.
  • Cyberbullying or Trolling: Another dangerous element is the labelling and trolling of more rational voices or those who disagreed with the government’s actions or dominant public discourse as “anti-national.”

Way Forward

  • Social media awareness is needed which may enable citizens to be in a position to distinguish between truth and falsehood – and to know when democratic processes are being manipulated.
  • Social Media Platforms can provide safeguards in the event that democratic processes are being intentionally disrupted or harmful falsehoods are spreading; it can help people find out what is true.

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